LAHORE: The consumer-price index (CPI) inflation for June 2018 is expected to rise to 5.4 percent year-on-year (YoY) compared to 4.2 percent YoY and 3.9 percent in May 2018 and June 2017 respectively, said AKD Securities.

The increase in CPI inflation is being majorly attributed due to the base effect kicking because of contained food prices and budgetary measures adopted last year (FED on cigarettes).

Also, an uptick in food index inflation, up 1.8 percent month-on-month (MoM) due to Eid-ul-Fitr also remained an additional pressure.

AKD Securities predicted CPI to average around 3.94 YoY percent for FY18 lesser than 4.15 percent YoY in FY17.

It added the inflation was reined in due to lower prices of perishable food items during the winter season.

As per weekly SPI trends, CPI inflation for June 2018 is projected to touch 5.4 percent, much higher than the 4.2 percent YoY/3.9 percent YoY in May18/June17.

The report added, “However, increase in prices of petroleum product during the month (+4.83 percent/6.68 percent in Mogas/Diesel) are expected to be reflected in CPI inflation for the next month due to a static methodology of collecting prices.”

Furthermore, AKD Securities stated “Inflationary pressures are likely to remain in place for the upcoming year on account pass through inflation from 13.9 percent currency adjustment in FY18TD along with higher oil prices (Arablite up 28.5 percent in FY18) as well as recent budgetary measure regarding reversal in FED on cigarettes yet to be implemented. In this regard, CPI inflation is expected to average out to 6.13 percent YoY/6.55 percent YoY in FY19F/CY19F.”

“Supply dynamics in heavy-weight food index would remain a dominant factor in leading the CPI inflation where most of the prices remain administered by the GoP while any supply disruption could lift the CPI beyond our estimates,” said AKD Securities.